Hurricane Sandy Victims Face Higher Flood Insurance Premiums
Hurricane SandyÂ victims just can’t catch a break. Only months after facing one of the most devastating hurricanes to reach the East Coast, some may have one more hurdle to jump. According to recent reports,Â flood insuranceÂ rates for some New Jersey policyholders are expected to increase later this year. With many residents struggling to recover from losses at the hands of the storm, paying higher premiums could prove to be a true challenge.
National Flood Insurance Program Eliminates Discounts
Tens of thousands of New Jersey homeowners and business owners may soon have to pay more for their flood insurance this year — including individuals who were directly impacted by Hurricane Sandy.
Following the 2012 federal law, known as the Biggert-Waters Act, passed prior to the storm striking, theÂ Federal Emergency Management AgencyÂ (FEMA) has begun phasing out discounts (via subsidies) for flood insurance that had been in place for many decades.
Discounts were granted to certain properties built prior to the 1968 enactment of the NFIP. Other properties were â€œgrandfathered into lower rates, which helped keep them from facing standard rate increases even as their flood risk grew.
Officials say the move to eliminate them is a part of a broad effort to modernize the National Flood Insurance Program (NFIP) while cutting down $23 billion in debt that followed Hurricane Katrina in 2005.
Discount elimination will currently impact homes and businesses that have experienced severe or repeated flooding in the area. About 17,300 properties and 5,000 businesses fall into this category.
Hurricane Sandy Victims to See Major Insurance Increase
Individuals directly impacted by the elimination in discounts will likely see sharp increases in their flood insurance costs.
Federal Emergency Management Agency officials noted on a conference call with reporters that homeowners face 25 percent increases every year until their premiums reflect the full risk of flooding. The rates are expected to begin increasing on Oct. 1, 2013.
Individuals who own vacation homes, seasonal homes and rental properties have already started seeing increases. As of Jan. 1, properties went up 25 percent and will do so each year until their premiums reflect actual flood risk.
Luckily, a large number of primary homes with subsidized flood insurance will be able to keep their subsidies unless they are sold, flood insurance lapses, or they suffer severe or repeated losses.
For individuals losing their discounts, particularly those impacted byÂ Hurricane Sandy, FEMA recommends taking on a higher deductible or lifting the home a foot above the base-flood elevation to reduce flood insurance rates.
(Image courtesy of piyato /Â FreeDigitalPhotos.net)